Home-building activity again disappointed in May, below expectations with housing starts down 5.5 percent to a rate of 1,092,000, according to the latest data from the U.S. Census Bureau and the Department of Housing and Urban Development (HUD). Single-family housing starts decreased 3.9 percent to 826,000. Starts for units in buildings with five units or more came in at 284,000.
Permits also fell short, down 4.9 percent from April to 1,228,000, according to the data. Single-family permits decreased 1.9 percent from April to 779,000. Permits for units in buildings with five units or more came in at 358,000.
Completions, however, totaled 1,164,000 in May, rising 5.6 percent. Single-family completions increased 4.9 percent from April to 817,000. Completions for units in buildings with five units or more came in at 335,000.
“Even though housing starts fell in May, the good news for buyers is that the number of completed new homes is up,” says Joseph Kirchner, senior economist at realtor.com®. “With completions up 5.6 percent from last month and 14.6 percent from a year ago, these new homes prevent the number of properties the market from falling too rapidly. Unfortunately, it is probably not enough to stem the steady decline of homes for sale that is contributing to accelerating prices and bidding wars across the country. The shortage of homes is so acute at the low end of the price range that it is affecting overall sales of new and existing homes. Compared to a year ago, the sales of properties under $250,000, which is approximately the current median price, fell 9 percent, but rose 8 percent for properties above $250,000. As prices continue to go up, millennials, who make up the largest segment of buyers, will find it more difficult to take the homeownership plunge.”
“[This] report is consistent with builder sentiment in the housing market, indicating some weakness after a strong start the year,” said Granger MacDonald, chairman of the National Association of Home Builders (NAHB), in a statement. “Ongoing job growth, rising demand and low mortgage rates should keep the single-family sector moving forward this year, even as builders deal with ongoing shortages of lots and labor.”
Source: U.S. Census Bureau
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